in the fall and spring is likely to cause severe price depressions, which in turn would adversely affect American price levels. Once this lower level is established it would be more difficult to advance later. If the Canadian wheat were allowed access to the large markets south of the border, with their great absorbing capacity and large volume of hedging operations, it would be more easily absorbed, and, it is asserted, less likely to depress American prices through pressure upon the final markets. This consideration, however, presupposes a considerable American surplus. It would not apply in case of a domestic shortage, in which event the tariff barrier obviously would advance domestic prices. In conclusion, a larger volume of supplemental imports, especially from Canada, is to be anticipated. Geographic factors, local or general shortages of different kinds of wheat, and the character of the milling demand-such forces draw foreign supplies for domestic consumption even when large exports of American wheat and flour are moving forward. As yet they are potential rather than actual causes of foreign competition. Whether free trade will result in large imports, how soon or how severe this competition, depends largely upon unstable factors in the international demand and supply. In the chief importing countries national control still prevails. Not only do their policies include national buying, bread subsidies, fixed prices below the world level, and the purchase of wheat rather than of flour, but also the stimulation of production and reduction of imports. In wheat, however, constant national selfsufficiency can not be assured, for climate is much more important than variations in acreage. And in case of need the acreage may be readily increased, though of course largely at the expense of other farm products. In opposition to this attempted curtailment of imports, the surplus of Canada and other exporting countries has been increased, and there is the further possibility of large exports again being made by Russia and Roumania. Doubtless the United States will continue in any event to produce large quantities of wheat (as do the importing countries of Europe)—more extensively in the springwheat region, in the dry-farming sections of the West, Southwest, and Pacific Northwest, and largely also in crop rotations elsewhere. TARIFF PROVISIONS WITH RESPECT TO WHEAT. The Underwood Act of 1913 placed wheat-which since 1897 had been subject to a duty of 25 cents a bushel-together with wheat flour, semolina, and other wheat products, on the free list; with the provisions that wheat should be subject to a duty of 10 cents a bushel, wheat flour 45 cents a barrel, and semolina 10 per cent ad valorem when imported from a country which imposed a duty on any or all of these three commodities imported from the United States. Argentina removed its duty upon these products on December 27, 1913. It was considerably later, and only under the stress of war conditions, when much of the world's shipping moved through American ports, that other important surplus-producing countries accepted the reciprocal free trade in wheat and wheat flour offered through this provision. In order that the Canadian farmer might secure the best price for his wheat, especially in time of war, when urgent appeals were being made for increased production, the Canadian Government directed, by an order in council, under authority of the war measures act of 1914, that on and after April 17, 1917, wheat, wheat flour, and semolina be transferred to the list of goods which might be imported into Canada free of duty. By the amendment of July 7, 1919, to the Canadian customs tariff, wheat and wheat flour were made free of duty when from countries which accorded like treatment to the Canadian product; when from other countries the import duty on wheat was fixed at 12 cents per bushel and on flour at 50 cents per barrel. Australia removed its duty on September 27, 1917, and British India placed wheat temporarily on the free list on January 25, 1919. Import duties of the United States upon wheat and wheat flour, 1883–1913. 1913..644... Wheat, wheat flour, semolina, and other wheat products, not specially provided for in this section: Provided, That wheat shall be subject to a duty of 10 cents per bushel, that wheat flour shall be subject to a duty of 45 cents per barrel of 196 pounds, and semolina and other products of wheat, not specially provided for in this section, 10 per centum ad valorem, when imported directly or indirectly from a country, dependency, or other subdivision of government which imposes a duty on wheat or wheat flour or semolina imported from the United States. 20 cents per bushel. For the present, then, there is free trade in wheat, wheat flour, and semolina between the United States and virtually all important exporting countries which are likely to ship to this country. It is only a nominal free trade, however. On June 1, 1920, the United States relinquished the control it had exercised over imports and exports during its participation in the World War, and also terminated the price guarantee. But in the chief exporting and importing countries national control still prevails. Both production and trade remain of an abnormal character. WORLD PRODUCTION AND TRADE. A brief preliminary review of world production and trade will disclose some phases of the normal competitive situation. International supply and demand normally regulate the level of domestic prices. Ordinarily American wheat prices are nearly as directly affected by the harvest of Argentina, Canada, or of other large exporting countries as by that of the Dakotas or of Kansas. Of the world production of around 3 billion bushels, Europe produces about one-half, the United States 20 per cent, British India 10 per cent, Canada, Argentina, and Australia each around 5 per cent, the remaining 5 per cent being contributed by a large number of countries. Approximately 650,000,000 bushels, or less than one-fifth of the world's annual production, enters into international trade; and this trade consists largely of the imports of about seven industrial nations of Europe, and of the surpluses chiefly of Russia, the United States, Canada, and Argentina, and to a smaller extent of British India, Australia, and Roumania (see table on page 22). The world demand usually remains fairly constant, while the surplus of the exporting nations varies greatly from year to year in both quantity and quality. The dominant influence of the supply factor upon current prices is enhanced by a somewhat distinct demand for different classes and qualities of wheat. Large quantities of soft wheat are grown in the chief importing countries, which are in especial need of the hard varieties for blending in bread flours. Southern Europe also imports much durum wheat for the manufacture of macaroni and other edible pastes. The principal surplus-producing regions are far distant from markets; population is sparse, the type of agriculture extensive, land relatively cheap, and there is little competition from other crops. Of the total exports, fully 85 per cent moves to western and central Europe. The United Kingdom imports annually over 210,000,000 bushels, or about three times as much as Germany, which usually ranks second among the importing countries. Brazil, with imports of around 20,000,000 bushels, is the most important of the regions of deficient production outside of Europe. Because of the dominant position of the United Kingdom in the import trade, the British market is generally recognized as the "ruling" one. Wheat harvests are constantly in progress in some part of the world, and the exports are seasonal; the volume and quality of the harvests of the principal exporting countries successively affect Liverpool prices and are reflected in other grain centers. In the Northern Hemisphere, the harvests begin about March in British India and end 2 These figures are based upon averages for the five years 1909-1913. No great or permanent change in the channels of trade as a result of the World War appears probable. Trade statistics include flour, equated to wheat. in September-October in the more northern latitudes. In the Southern Hemisphere, only the crops of Argentina and Australia, harvested during December and January, are of general interest. This world trade is in the form of wheat rather than of flour, exports of flour usually constituting only about one-sixth of the total. Higher ocean and rail rates on flour, higher import duties, the local value of mill feed, and local preferences-such factors promote the shipment of the raw material instead of the manufactured product. The United States ships approximately 40 per cent of the world exports of flour, nearly three times as much as Canada, the country ranking second. TABLE 1.—International trade in wheat and flour (average, 1909–1913). [From the Yearbook of the U. S. Department of Agriculture, 1919.] 1 Flour has been converted into wheat at the rate of 4 bushels per barrel of flour. 2 To obtain the net exportable surplus, deductions should be made of the exports of Belgium, Germany, and the Netherlands, which are evidently reexports of foreign wheat. |